Local government spent more than £2.5bn with external suppliers during 2013, according to new figures released today.
The figures were compiled on behalf of the Institute for Government by data company Spend Network, based on 38 million transactions from 247 central and local government organisations.
However, the IfG said that the government still needs to improve its open data in order to be able to understand spending on individual contracts, particularly relating to small and medium enterprises (SMEs) and through Private Finance Initiative (PFI) deals.
The report said: “Of the money going from government to the largest suppliers, 73% comes from central government and 27% from local government. However, this is not a small sum with over £2.5bn flowing from local government to the largest suppliers in 2013.”
Analysis of the spending data for 2013 showed that 73% of the top 20 suppliers’ revenues came from central government, with 27% coming from local government.
The bulk of local government spending was on construction and outsourcing – the figures showed local government spent more with supplier Capita than central government did during the year.
According to the report, the top 20 suppliers to central and local government accounted for at least £10.2bn of government expenditure during 2013. Six of the top 20 suppliers to government are IT firms.
The six largest IT suppliers were responsible for £4.13bn of spend in 2013, down from £4.49bn in 2012.
But the report recommended improvements in the way central government reports spending, saying there is not enough data, particularly down the supply chain, to verify government claims that Whitehall is on track to place 25% of government spend with SMEs.
It also said that only 53% of public sector tender notices published through the European tender directory are matched by a subsequent contract award notice.
The report said: “The data is published in a way that makes it hard to determine which companies ultimately benefit from payments relating to PFI contracts and joint ventures; is limited in accuracy due to the fact that some datasets are not published; and is constrained by the fact that central government transactions under £25,000 are rarely published.”
Jeni Tennison, technical director of the Open Data Institute said: “Providing more consistent and higher quality open spending data would enable more robust conclusions, and there is still not enough open data available about contracts and the performance of suppliers.”
The IfG also called for a reporting regime for PFI contracts and joint ventures allowing the public to identify commercial beneficiaries.
It also said that data on performance against contractual obligations and on subcontracting arrangements should also be published.
Commenting on the report, Jim Bligh, head of public services at business representative organisation CBI, said: “The government’s ability to design effective contracts depends in large part on understanding the current composition and effectiveness of its supplier markets.
“More spending data are available than ever before, but often government is data rich while being information poor.”